Understanding Disclosure Documents

Understanding Disclosure Documents

Document What you’ll find When it must be filed What else you should know
Annual information form (AIF)

Detailed information about a company’s:

  • corporate structure
  • directors and officers
  • capital structure
  • strategy
  • products, services and businesses
  • legal proceedings
  • risks

Investors do not have to be
given a copy of the AIF,
but it can be found on

Not all companies are required to file an AIF. For example, a company listed on the
TSX-V is not required to file an AIF

Financial statements

A report of a company’s financial information, made up of:

  • income statement
  • cash flow statement
  • balance sheet
  • statement of retained earnings
  • notes
  • audit report (for annual financial statements)
Quarterly and annually The financial statements, together with the MD&A, can tell you how well the
company has performed and the factors that influence its financial ability to perform well in the

 > Income statement

How much a company has earned and its expenses for a set period  

This does not necessarily reflect the company’s inflows and outflows of cash.

Also known as an earnings report, statement of earnings, statement of operations and statement
of profit and loss.

 > Cash flow statement How money flows in and out of the business from its operating, investing and financing
  How a company manages its money can say a lot about its ability to withstand market
changes or unexpected events. 
 > Balance sheet A snapshot of the net worth of a company at a point in time. It shows the company’s
assets, liabilities and shareholders’ equity. 
  Also known as the statement of financial position.
 > Notes

How a company arrived at the numbers in its financial statements and any significant events and
conditions that may affect the numbers.

For example, a note may explain that a company’s accounting methods have changed from the
previous year, decribe transactions with companies or individuals related to the company, or
disclose a purchase that may have an effect on the company’s financial condition.


Notes are a critical part of the financial statements and shouldn’t be ignored.

The accounting policies a company uses can significantly affects its numbers. For example, the
method used for revenue recognition will influence the numbers bin a company’s finacial

Insider trading reports Which insiders of the company are buying and selling the company’s shares. In general, within 10 calendar days after a trade or change in an insider’s holdings
of a company.
Directors, officers and major shareholders are considered “insiders” of a
Management’s discussion and analysis (MD&A)

Management’s explanation of events affecting the company’s performance and management’s
expectations for the coming year.

An useful and informative MD&A should offer insight into five key areas:

  • the company’s vision and long-term business strategy
  • the factors that will affect its success
  • its resources and capability to deliver results
  • current results
  • future risks
Quarterly and annually

The MD&A and financial statements are filed at the same time.

If the company does not file a management information circular, the MD&A may also contain
information about the board of directors, committees and corporate governance pratices.

Management information circular

Information about the shareholder meeting, voting process, items to be voted on or covered at
the meeting, and compensation of directors and officers.

It may contain other information such as committee reports and covernance practices.

When shareholders elect the board of directors or are asked to vote on significant
transactions proposed by a company.
This is sent to shareholders so they can make an informed decision about voting their
shares and other items covered at the shareholder meeting.
Material change report

Details about any material change in the company’s operations or capital that is expected to
significantly affect the price of its securities, once it becomes known to the public.

Examples of material changes may include take-over bids, selling or acquiring business units,
management changes and new products.

Within 10 days of the material change. It’s up to the company and its management to decide whether a change is material.
News release A public statement from the company about a material change that might influence
whether investors buy, hold or sell their investment.
Companies must issue press releases disclosing material changes promptly.

The news release is usually filed before the material change report.

Companies may also issue news releases about topics other than material changes. These may be
found on the company’s website.

Read news releases carefully. The news release is management’s view and you should compare or
verify the information with other sources. Be on guard against e-mailed or faxed ”news releases”
from dishonest stock promoters or individuals trying to stir up interest in a company or overstate
its achievements.


Material facts relating to the securities a company is planning to offer to the public,

  • a history of the company and a description of its operations
  • a description of the securities being offered
  • a list of directors and officers
  • financial statements
  • a summary of the major risk factors affecting the company
  • how the company will spend the money it raises by issuing the securities
Before the company issues shares or other securities to the public.

This must be given to everyone who buys the security.

A company may file a “long form” or “short form” prospectus.

A long form prospectus contains information about the company and the new securities issue in
one document.

A short form prospectus gives investors important highlights about the new securities issue. It
provides a list of disclosure documents filed on SEDAR that form part of the prospectus but are not
included in it.

Although prospectuses must be filed with the OSC, we do not assess the merit of the investment
opportunity or the accuracy of the information.

Some securities can be sold without a prospectus. These are called “exempt securities”. If you
buy an exempt security, you may not have the same legal rights as you do when you buy securities
under a prospectus.

Note: In this report I have integrated the exact content of the original source, to be certain that this information is retained. If you would like to read this report on the website of the original publisher I recommend you to click the source link below.

Source: http://www.osc.gov.on.ca/documents/en/Investors/res_research-invest_en.pdf

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